Yahoo chief Marissa Mayer announces birth of twin girls

The company will now aim to spin off its struggling Internet business – essentially, everything associated with the Yahoo brand name – into a new company.

Yahoo announced on Wednesday a plan to spin off its core internet business into a separate company.

“The board remains committed to accomplishing the significant business purposes and shareholder benefits that can be realized by separating the Alibaba stake from the rest of Yahoo”, Maynard Webb, the chairman of Yahoo’s board of directors, said in a prepared statement. But the IRS jeopardized that plan by refusing to guarantee a tax exemption.

When she announced her pregnancy 40-year-old Mayer, who already has three-year-old son Macallister with her husband Zachary Bogue, said she plans to take a “limited time away” for maternity leave and will be “working throughout”. Analysts and investors now are talking about ways that Yahoo can maximize its value for potential mergers or acquisitions. These segments of the business have been growing, but Yahoo’s overall performance has been uneven, leaving its investors unsettled.

Earlier this week we looked the latest scuttlebutt surrounding both the fate of Yahoo! and Mayer herself. They include websites, mobile apps and advertising services and could be worth between $3bn and $5bn. The best path forward, Webb said, involves “separating the Alibaba assets from our operating businesses and also turning around the performance in our operating business”.

Yahoo (YHOO) isn’t the only one reversing course today.

Alibaba alone accounts for $30 billion of Yahoo’s $32 billion market capitalization.

Earlier Tuesday Verizon’s top executive left open the possibility that the United States teleco giant could make a bid for Yahoo. The key metrics that matter to investors, including net income, return on capital and return on equity, have all been falling preciptiously over the past three years and analysts expect just 3.4% long-term growth.

Mayer indeed has a lot of things to face aside from her newborn girls – she still has a big company to lead back into reversing its current decline.

Yahoo’s revenue grew 6.8% in the third quarter, but profits dropped to $76 million. “The board has complete confidence in the management team and the leadership of Yahoo and believes the company is making important strides toward its transformation”, he said.